All about Financial Planning and life Goals, ranging from Plan to Marriage, Buy a Home, Investments, Child Education, life insurance, Startup Funding

Friday, 27 May 2016

What every Person should know about Financial Planning!

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Being a Financial Planner
whenever I discuss Financial Planning with any of the friends, or my relatives,
or even new clients, they misunderstand it to be only investments. Their replies
range from ‘Yes, we are doing savings’ to ‘We have to start investing.’ For
them Financial Planning is nothing but managing investments. Let’s all accept
it, for most of us Financial Planning is nothing but investing. But is it
correct? Does Financial Planning means only managing investments. Yes,
Investment is one part of Financial Planning, but Financial Planning is a
bigger picture which most people don’t understand.

So, let me explain what Financial
Planning is all about, and then you can take an informed decision if you should
follow this process for managing your money.

1.Financial Planning is an On-going process:
Financial Planning is not a one-time activity. It is a continuous process,
where you decide on your life time goals which get reiterated with time as your
life advances. Your income, expenses and your aspirations don’t remain same all
your life. Hence, your financial goals like Retirement expenses and ideal
Insurance cover also change with the change in all these factors. This art of
aligning your life goals with your current financial status is Financial
Planning and it continues till the time money is involved in your lives.

2.Financial Planning is not just talking
about your investments: Like I said earlier, Investment Planning is just
one part of Financial Planning. Financial Planning begins with need analysis
where you discover your financial aspirations and then map them as your goals.
Once that is done, your existing financial situation is assessed which tells
you what you have and what you want. Financial Planning also throws light on
what are you going to need in terms of your existing lifestyle. Because, believe
it or not there is always a difference between what you WANT and what you NEED.
For wishing something sky can be the limit, but your need is defined by your
existing earnings and expenses which reflects your current lifestyle. And to
sustain this current lifestyle in future you are going to need x amount of
money when you will not be earning any more.

3.Financial Planning tells if your existing
savings are enough: You might be already saving for your child’s education,
for your retirement, for the rainy days, and all other things. But have you
ever wondered that when the time comes, it might not be enough. Yes, Financial
Planning helps you in knowing if your savings will be able to cover your
expenses in the future, as it adds inflation into account. So, if your savings
are not enough, you might think of realigning your goals or even increase your
savings.

1 comment:

Nice blog,Thanks admin for sharing this information. I hope this will be useful for may individuals who are all wish to choose the financial planner and what the actual does. Keep on sharing.Regards,Nithuhire financial advisor | financial planning